Taiwan's June export orders surpass market expectations

Taiwanese export orders during the month of June improved, though still in red, marking the smallest rate of decline seen over the past 15 months ever since export orders started to shrink in April, 2015 as demand for wood and related products rebounded along with strong orders for toys, games and sports goods, reports showed.

June export orders declined 2.4 percent y/y, better than the -5.8 percent in May and beating the consensus of -5.0 percent, data released by the Ministry of Economic Affairs showed Wednesday. However, orders grew 5.9 percent m/m in June.

Looking ahead, exports growth may also turn positive in the second half of 2016, barring new shocks in the global markets. But it is unlikely to normalize anytime soon as Taiwan’s trade sector continues to face the structural headwinds, DBS reported.

However, orders for wood and wood products surged 27.2 percent, followed by a 24.1 percent rise in demand for toys, games and sports requisites. Moreover, demand for leather and related goods plummeted 23.5 percent and orders for precision instruments, clocks and watches and musical instruments declined 17.7 percent.

Meanwhile, without a full recovery in export figures, a significant recovery in the country’s gross domestic product seems unlikely as well.

"We expect GDP growth to rise to 1.7 percent in 2H16 from 0.1 percent in 1H16, but still below the 2011-15 average of 2.5 percent and far lower than the 2001-10 average of 4.2 percent," DBS commented in its research report.